Tyler Technologies (TYL) Stock Forecast & Price Target

Tyler Technologies demonstrated strong financial performance, highlighted by a 37% year-over-year increase in new software bookings for the fourth quarter, resulting in approximately $141 million in new SaaS contract value. The company's recurring revenue grew by 14.9% year-over-year to $463.9 million, constituting 85.7% of total revenues, and total annual recurring revenue (ARR) also increased by 14.9% to $1.86 billion. Additionally, subscription revenue saw a notable 21.9% year-over-year growth, reaching $348.8 million, further underscoring the company's robust performance and market position.

The negative outlook on Tyler Technologies's stock is driven by several key factors, including the anticipated decline in transaction revenues due to the wind-down of a significant Texas payments contract. Professional services revenue is projected to remain flat or decrease slightly, and license revenues are expected to decline substantially by 18% to 20%, reflecting a challenging sales environment for new clients. Additionally, the reclassification of costs and pressures on various revenue segments are likely to push gross margins close to 50%, contributing to a less favorable financial outlook for FY25.